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The luxury leather goods brand announced that sales fell by 42% in the second quarter as the Covid-19 crisis forced it to close stores and pause production.
Hermes, which makes the US$ 10 000 Birkin bag, said revenue in the first half of the year was down 25% to €2.5bn, with the 42% sales drop between April and June reflecting “the impact of the health crisis on the network”, the company said. At the peak of the Covid-19 crisis, Hermes closed 75% of its stores across the world but has since reopened most of its sites. In mainland China, all stores reopened in March and have reported a strong sales growth. Meanwhile, sales in the U.S. saw a “very gradual” recovery at the end of June and sales in Europe have been badly affected by the reduction in tourist numbers. Online sales increased by 100% or more in China and the growth continued even after stores reopened there, indicating that the bulk of online shopping was made by new customers.
In a sign of confidence, the French group hired an extra 300 people in the first six months of this year, mainly in production, stressing that it continues to invest to expand its manufacturing capacity for leather goods in France. It also slightly increased prices.
Hermes said it confirms an “ambitious goal” for revenue growth in the medium term, despite growing uncertainties.
Source: Reuters / City AM